Warring trade agreements

Global moves towards free trade over the past decade have ended in failure. The Doha Round is effectively dead.

As a result, world leaders have adapted. Free trade agreements are now procured piecemeal rather than in toto, regionally rather than globally.

From December 3 to 12 in Auckland, New Zealand, the Obama administration hopes to finalise by the end of next year just such a regional trade agreement: its much vaunted Trans-Pacific Partnership.

The 11-nation TPP is seen as an essential part of Obama's Asian pivot and crucial to expanding American exports and economic influence in the Asia Pacific.

But the TPP is running into sizeable competition.

At the recent Association of Southeast Asian Nations meeting in Cambodia, its 10 member states — along with Australia, China, Japan, India, South Korea, and New Zealand — unveiled what promises to be the world's largest-ever regional trade agreement, the Regional Comprehensive Economic Partnership.

The birth of the RCEP raises difficult questions: Can the US-led TPP co-exist alongside Asian-organised regional trading blocs, particularly if the latter include China and exclude the US? Or will such duelling trade agreements, ostensibly promising greater economic integration, instead lead to greater economic conflict?

This is the spectre looming over the Asia Pacific as we approach the kick-off of the 15th TPP round in Auckland this coming week.

One possible outcome is that the warring trade agreements will force delineation between pro-US and pro-China signatories, thereby enhancing political economic tensions in the Asia Pacific rather than alleviating them. Shiro Armstrong of the Australian National University, for instance, has argued that China must join the TPP, or else the TPP "might divide the region strategically between its members and the rest, with China being on the outside".

With even more pessimism, Auckland University law professor Jane Kelsey believes that the RCEP and the TPP are giving rise to a "new version of the Cold War, as old players flex their muscles in the new arena of competing so-called free trade agreements". American Cold War veteran Henry Kissinger has similarly concluded that the TPP is an unconscious policy of Chinese containment.

New Zealand will host the next TPP round in the days ahead. Long a proponent of regional free trade and the originator of the TPP, New Zealand — like Australia — has also signed on to the RCEP.

Because of this development, however, critics such as Terence O'Brien, senior fellow at Wellington's Centre for Strategic Studies, are now warning New Zealand to handle the US-led TPP package with care.

Why the warning? Because the TPP challenges the regional leadership of ASEAN and, indirectly, China. Added to this, the RCEP includes China among its members and notably does not include the US.

This places the Kiwis in a potentially precarious position, even though the TPP maintains a higher priority. Prime Minister John Key made it clear at the recent East Asia Summit in Phnom Penh that, although he welcomes the RCEP, the "TPP is the big game for us at the moment".

New Zealand's Trade Minister Tim Groser admits as well that his country's policy is to "dance with anybody provided they are prepared to engage in a high-quality FTA", but also acknowledges that "you can see quite clearly the possibility of creative tension" between the RCEP and TPP.

Obama's Asian pivot places Australia in an even greater pickle, as it holds an even more strategic position in the mounting regional contest between the US and China.

Julia Gillard justified joining Australia to the RCEP late last month, saying: "We're prepared to be in all starters that can get us there to that broader vision, which is why we will be there for the (RCEP), which is why we will be there for the TPP."

But Australia also has a tight grip on the reins of what Trade Minister Craig Emerson calls the "workhorse of regional integration", the Asia Pacific Economic Co-operation, which is hoping to help steer both the TPP and RCEP to success.

Owing to Obama's pivot to Asia, Australia has taken on an ever more pivotal geopolitical position.

Sitting alongside the US in Auckland over the coming days, Australia must take advantage of its prominent place near the head of the TPP table. If handled deftly, Australia could very well redirect the region away from its looming free-trade showdown, especially if it can coax China, Australia's largest trading partner, to pull up a chair.

This article was originally published by The Australian

Dr Marc-William Palen

Lecturer, The University of Exeter

Marc-William Palen was a Postdoctoral Fellow at the US Studies Centre in 2011 and a Research Associate from 2012 to 2015. During his time at the Centre, he revised his book manuscript, The Conspiracy of Free Trade, for publication. Palen is currently a lecturer in imperial history at the University of Exeter. He specialises in the intersection of British and American imperialism within the broader history of globalisation since 1800 and how political economy, gender, and ideology have shaped global imperial expansion.